Martha Stewart; The Rise, Fall and, Rise Again

Topic: Martha Stewart; The Rise, Fall and, Rise Again

Background:

She’s a Jersey girl with a flare for home making. Born Martha Helen Kostyra in 1941, Martha Stewart has been a part of the business world since 1967. She’s a familiar face and an accomplished author, editor, and model who charmed millions with her abilities to give everything in the home the “right touch” until 2002 when accusations of insider trading surfaced ending in a 5-month jail sentence.
Coming from an eight-person middle-class home in Jersey City, New Jersey, Stewart learned many of her skills for cooking and gardening from her Polish-American parents. She began her modeling career while still in high school and was awarded a partial scholarship to Barnard College in New York City. While there she studied Art and European History as well as Architectural History and met and married her husband, Andy Stewart. Stewart’s daughter, Alexis was born in 1965. Two years after the birth of Alexis, Stewart entered the business world, and in particular, Wall Street. This move would characterize her for years to come.

The Rise:
Stewart began her rise to fame by starting her own catering business. Named “The Uncatered Affair,” Stewart and her friend, Norma Collier, started the business from Stewart’s basement. The business was successful but the partnership soon failed when Collier discovered Stewart was taking on jobs without telling her. Collier would comment later that Stewart was hard to work with. At this time, Stewart also became the manager of a gourmet food store called “The Market Basket.” Here she was able to use her business skills once more to turn the small store into an economic success.
In 1977 good fortune struck again as The Uncatered Affair catered a book release party for New York publisher, Harry N. Abrams, Inc. Stewart was introduced to Alan Mirken, who was the head of the Crown Publish Group. He later contacted her to write Entertaining, a cookbook with recipes and pictures from her parties. It was a New York Times Best Seller.
Word of her skills grew and Stewart published more books, beginning in 1984. She also wrote newspaper columns and magazine articles and made television appearances. By 1990, Stewart began to serving as editor-in-chief for Martha Stewart Living, a magazine published by Time Publishing Ventures. In 1993, Stewart’s televisions show, by the same name, earned the privilege of being shown daily for one-hour. In 1995 CBS called her “the definitive American woman of our time.”
With goals of brand direction in mind, Stewart decided to compile each of her separate companies into one solid structure. The end result was called “Martha Stewart Living Omnimedia” and the announcement of the launching of her website http://www.marthastewart.com, and “Martha by Mail,” a catalogue business.

The Fall:
The downfall of the Martha Stewart Empire came in 2002. Stewart, the stock broke connoisseur sold her 3,928 shares of the experimental oncology drug company ImClone days before FDA did not approve the drug. The following day, ImClone fell 16 percent. Stewart was accused of insider trading and in March of 2004 she was convicted on four counts of lying to investigators and obstruction of justice. With this came a series of reputation-ruining events such as stepping down as CEO of MSLO, resigning her board member status at the New York Stock Exchange and beginning serving a five-month prison term at the Alderson Federal Prison Camp in West Virginia.
Under a settlement made in August of 2006, Stewart paid $195,000 to the Securities and Exchange Commission. Stewart was barred from serving as a director of a public company. This means limitations in all areas of finance.

The Rise (again):
Now that she was out of prison, Martha Stewart was ready to get her life back. She returned to Martha Stewart Living, the magazine, and expanded her home furnishings line to bigger companies such as Sears. The biggest part of her revival was returning to her television show and then attempting an Apprentice spin-off, which failed after just one season.
Other attempts came in the forms of two new book released in the October following her sentence, one concerned the aspects of a successful business and the other was a baking hand-book. She resumed her role of contributing gardener, cook and homemaker for various NBC’s The Today show segments. The following year, Martha Stewart Living was nominated in six categories, including Best Host and Best Show, for the Daytime Emmy Awards.
Other various projects have followed such as MSLO launching a line of houses prices between $200,000 and $400,000. The houses are to be modeled after a selection of Stewart’s own homes. MSLO is currently involved in the development of upscale home wares for department stores, a 24-hour satellite radio network where Stewart hosts a call-in show.
In 2006 Stewart made a guest appearance on ABC’s Ugly Betty where she gave instructions on how to properly cook a Thanksgiving turkey.

Steps Taken to Prepare for Case Study:

Research:
Primary research for this case study, The Rise, Fall and, Rise Again of Martha Stewart, was chiefly conducted through the search engines of Pro Quest, Lexis Nexus, the Martha Stewart webpage and, various books containing other case studies done on Martha Stewart and her life. News articles as well as press releases provided the bulk of information pertaining to Martha Stewart’s legal problems involving the allegations brought against her for insider trading of ImClone stock and her conviction for conspiracy and obstruction of justice. All major news sources in the nation included articles about the case including: the New York Times, USA Today, The Washington Post, the San Francisco Chronicle, the Los Angeles Times and, the Wall Street Journal. The bulk of press releases concerning the case were released through PR Newswire and all were included on the Martha Stewart web site. Interviews conducted with public relations professionals was additional research done that provided us with a critical analysis of the case and how it was portrayed by the media as well as Martha Stewart’s personal representatives.
The news articles as well as press releases outlined the feelings of both the media and Martha Stewart Living Omnimedia toward the case against Martha Stewart and her legal matters. In many instances the media is unbiased towards Stewart and merely presents the facts. In other cases the media portrays Stewart as just another wealthy executive who was getting what they deserved; a representation that money does not get you an out of jail free card and, in other cases portrays her as a victim who was targeted for her status as a female figurehead in American business. However, the press releases released by MSLO have a much different tone and humanize Stewart allowing her, her to be seen as person who had made a mistake and who was facing her charges backed by the support of her friends, family and company. The press releases always portray Stewart as the leading lifestyle specialist and a woman who feels deep sorrow for her actions and in no way meant to compromise any one else’s livelihood. The company supports Stewart and considers her an integral part of their future endeavors.

Objectives of this case study:
• Outline the rise of Martha Stewart’s career beginning before she entered the public eye, during her rise to fame including, the aspects of her life that made her famous then, her fall during her legal problems concerning insider trading of ImClone stock.
• Discuss the way the outside media portrayed Martha Stewart during the years of her legal struggle.
• Discuss the way that her company, MSLO, portrayed Martha Stewart during the years of her legal struggle.
• Outline the efforts MSLO took to rebuild their brand image and repair their losses from negative media coverage of Martha Stewart.

SWOT Analysis

Strengths:
• There were many press releases and news articles written throughout the duration of the case making information easily accessible.
• Many others have written case studies about Martha Stewart and have investigated her life; this information will be helpful in our own research.
• Direct contact with a staff member of Martha Stewart Omnimedia will be helpful in obtaining an interview with a public relations professional who was involved in Martha Stewart’s affairs.

Weaknesses:
• Our student status makes it difficult to obtain an interview with a public relations practitioner therefore, making first hand information difficult acquire.

Opportunities:
• Our direct contact with a MSLO employee makes an interview with a public relations practitioner more achievable.
• The large amount of information published on the topic.

Threats:
• Inability to contact a public relations professional to receive an opinion about how the Martha Stewart case was handled by MSLO.

Strategies for this case study:
• Obtain detailed research about the topic through many online databases, books, and interviews with public relations professionals.


Steps Taken by MSLO:

Strategies employed by MSLO beginning in 2002 and continued through 2007:
• Connect the Martha Stewart name with quality and reliability.
• Create a softer image and allow her audience to see a more vulnerable side through the use of: personal statements and outward emotions.
• Continue to recognize Stewart as a trustworthy and important leader; continue to involve her in MSLO creative aspects by creating a position for her within the company.
• Continue to enforce the support of Stewart’s company, MSLO, by issuing statements and personal quotes by top executives within the company.

SWOT for MSLO:

Strengths:
• Martha Stewart had an already developed a fan and consumer following.
• Strong brands that many relied on for use in their everyday lives.
• The backing of many of the companies that sold her products.
• Stewart’s celebrity status provided many media outlets to implement strategies.

Weaknesses:
• Some media outlets were portraying Stewart negatively.
• Stewart’s image at the time of the accusations did not portray her as a very humble individual.
• Stewart’s personal legal matters were extremely out of character for the persona she portrayed as a celebrity.
• Stewart’s celebrity status would make cause fans to show no empathy towards her cause.

Opportunities:
• Many media outlets were interested in the story making it easy for MSLO to spread their messages.
• Martha Stewart’s vulnerability during the time of her trial and imprisonment allowed for the reshaping of her image.
• Because of Stewart’s publicity through her trial audiences were interested in hearing all news concerning her.
• Media outlets were willing to conduct interviews with Martha allowing her to display a more humble persona for all to see.

Threats:
• Some media was portraying Stewart unfavorably.
• Fans and consumers would be unperceptive to Martha’s new image because of the media’s focus on her legal matters.
• Companies who had previously supported MSLO brands would no longer support them.
• Stewart herself would be uncooperative in matters that concerned her legal problems and, continue to further damage her image.

Tactics by MSLO:
• Form partnerships with companies who are considered to be reliable; reinforcing the reliability of MSLO: ex. partnership with KB Homes.
• Creating a new position for Stewart within the company allowing her to continue to exercise her creative talents show her dedication to her products.
• Maintain Stewart’s visibility by creating outlets for her to reach her public: Martha, new television show beginning in 2005 after her release from prison.
• Issue personal statements from Martha and allow her to interact with her customers: television shows, radio shows, personal statements etc.
• High ranking company officials recognizing the need for Stewart’s continued contributions to the company as necessary for its survival: personal statements and creating the position of Founding Editorial Director.

Results:
• Many new media outlets developed over the past several years including: Martha Stewart’s “Apprentice”, Martha, Body + Soul magazine, Everyday Food magazine, Martha Stewart’s Home Entertainment Library and, Martha Stewart Living radio channel, partnership with KB Homes, and, paint colors partnership with Lowe’s among other things.
• Dramatic increase in stock value in the third quarter 2006 with revenues growing 48 percent to $61.1 million.
• Success of Martha: show has been sold in more than 90 percent of the country for the 2006-2007 season.
• Continued creation of Martha Stewart lines.

Evaluation:
• The rise in MSLO stock prices.
• The success of Stewart’s television series, Martha.
• The Martha Stewart brand name’s continued partnerships with other companies.
• The continued success of MSLO magazines.
• Favorable media coverage of Stewart.

Our Analysis:

This case study, The Rise, Fall and, Rise Again of Martha Stewart, has outlined many important aspects in crisis management. The public relations professionals at Martha Stewart Living Omnimedia were successful in their strategy of keeping the Martha Stewart image clean-cut and well-bred. The company’s initial reactions to the allegations never suggested they suspected any fault in Stewart. Their attention to detail and, never ending efforts of separating Stewart’s personal legal matters from her company and line of products in the end allowed for the Martha Stewart image to be relatively unscathed. Their use of all vehicles, television, print, radio, internet, and public promotion through partnerships; pushed the Martha Stewart brand on the public and reinforced its integrity.
MSLO’s quick reaction to the matter resulted in not much time for the media or consumers to form negative opinions of Stewart. Constantly humanizing Stewart and allowing her to reach out to her public was necessary in allowing her to keep her integrity as a person and as a brand. The quick reaction made by the company to clean up Stewart’s mess was ultimately what saved her. If this issue had not been addressed immediately Stewart would have been seen as merely another rich entrepreneur getting what they deserved however; this was not the case and Martha Stewart and her brands are still seen today as American staples.

Current Information:

Throughout all of Martha Stewart’s personal troubles over the last four years there has been one ally that has stood by her; Martha Stewart Living Omnimedia Inc. Encompassing the many aspects of what Martha Stewart, the brand name, has become from her cookbooks to her television show, MSLO has supported their leader and former CEO from the beginning of her troubles in 2003 and continues to do so in 2007.
• Recognizing and establishing from the start that Martha Stewart’s legal problems with insider trading were in no way in regards to MSLO, the company chose to use the situation to strengthen their brand image.

Statements released by the company continually recognize Stewart’s contributions to society and her efforts towards improving the quality of life for many. The company humanizes Stewart and enforces to the public that her mistake was not meant to harm MSLO or any of their customers. MSLO continually pledges their alliance to Stewart and her quality products and creative ideas. New CEO of MSLO, Sharon Patrick, issued a statement on March 15, 2004 that reinforced the above idea, “Everyone at MSLO recognizes the seriousness of Martha’s situation and is deeply saddened. However, all of us also believe that the company and our constituencies benefit most if we are able to continue to take advantage of Martha’s creative inspiration and capitalize on her prodigious skills and experience in the domestic arts.”
Stewart’s own statements also reinforce the fact that her actions were not in any way in connection with MSLO and, that she is deeply saddened by her inability to no longer function as their acting leader but that she is thankful for her company’s continued support and could not get along without it, “I am heartsick about my personal legal situation – and deeply sorry for the pain and difficulties it has caused our employees. I can never thank my MSLO colleagues enough for their spirit, resiliency and dedication.” (March 15, 2004) Stewart’s statements also reinforce the brand image that is connected with Stewart herself; as a personable and reliable person who, like the everyday people that her products cater too is a person who can also be vulnerable at times.

• Although MSLO was experiencing inner turmoil, declining stock value and, decreased magazine circulation the company continued to value Stewart’s ideas and opinions and founds her critical in future success of the company.

Stewart is never referred to negatively but instead, as a force that will continue to guide and inspire the company in its continued endeavors. In 2004 at the height of Stewart’s legal troubles, MSLO created a new position for Stewart after she was forced to step down from her duties as CEO; MSLO created the position of Founding Editorial Director for Stewart. This recognition by MSLO of the importance of reinforcing their positive beliefs in Stewart by enabling her to continue in her creative efforts with the company was critical in order to maintain the positive beliefs of their consumers. Throughout the last four years MSLO has continued to reinforce their belief in the leadership abilities of Stewart and have kept her at the forefront of the company. Her show, Martha Stewart Living, was put on hiatus for only one year before returning to daytime television in 2005 revamped and called simply, Martha. The new show imposed on audiences the kind hearted and likeable side of Martha, “The hour-long show will be taped live with a studio audience and feature a new programming format that allows audience members and special guests to participate and interact with Martha, (Dec 8. 2004). The new show was an important maneuver towards casting off the shadow of Stewarts personal legal matters that included a five month prison stay as well as five months of house arrest.
• Continually connecting the Martha Stewart brand name with quality and assurance; again reinforcing the trust that MSLO has in their founder’s ideas and opinions.

Although portrayed by the media as yet another wealthy CEO who got what was coming to them MSLO continued to recognize Stewart as their leader continuing to rely on her good name. In 2005, MSLO announced their partnership with KB Homes, a leading home producer, in designing communities modeled after Martha’s Stewarts own homes in Maine and New York State. This collaboration again reinforced Martha Stewart as the leading lifestyle expert, “KB Home and Martha Stewart are names that stand for superior quality and style," said KB Home Chairman and CEO Bruce Karatz,” (October 12, 2005). The support from another well-known company was also a crucial aspect to the merger and signified the confidence of outside vendors in MSLO and Stewart.
Although the years following Stewart’s personal legal problems resulted in initial damages to her company, MSLO, with plunging stock prices, the loss of over 200 jobs and, upper management reconstruction the company continually supported their founder. By portraying Stewart, as a victim instead of a criminal MSLO was able to keep the Martha Stewart brand image unscathed. Today Stewart is active in all aspects of the company although, she is still not yet allowed to resume her position as CEO. Her magazine, television shows and, outside projects such as her collaboration with KB homes are thriving. 2006 third quarter results showed that MSLO was again flourishing with their revenues growing 48 percent, improvements in all business segments and significant reductions in operating loss. "Our 2006 performance continues to reflect renewed vitality across the Company…As we approach 2007, we are confident that initiatives such as our new Martha Stewart Collection for Macy's and the re-launch of our website will provide additional growth as we execute our strategy to thoughtfully leverage our brand,” said CEO Susan Lyne (Third Quarter Results, October 31, 2006).


Current Articles:

Since being accused and sentenced for insider trading, it is obvious that Martha Stewart has been in the media’s eye. By reviewing the following 6 articles pertaining to her case, we can see additional information to how the media portrayed her and more insight to her case.

The New York Times wrote an article in March of 2004 saying that the reason for Martha Stewart’s conviction was do to a unwell known federal law called 1001 which states that lying to a federal agent, even when not under oath is prohibited. Stewart’s crimes were lying to F.B.I. agents and the Securities and Exchange Commission who were investigating her case.
• http://proquest.umi.com/pqdweb?did=572512631&Fmt=3&clientId=9874&RQT=309&VName=PQD

In a New York Times article from 2004, reports of why Martha Stewart would want to begin serving her time before her appeals were settled. Basically the article explained that Stewart wished to “reclaim her good life.” While this article shows Stewart in a optimistic and kind way, it clearly shows that she just wants to get her sentence over with and not really accepting the responsibility, but simply getting it over with.
• http://proquest.umi.com/pqdweb?did=696909201&Fmt=3&clientId=9874&RQT=309&VName=PQD

The New York Times reported in July of 2004 that Judge Miriam Goldman Cedarbaum would not participate. Stewart’s lawyers claimed that the Supreme Court guidelines were “unconstitutional.”
• http://proquest.umi.com/pqdweb?did=665207431&Fmt=3&clientId=9874&RQT=309&VName=PQD

With considerations of a reconsideration of Supreme Court sentencing guidelines, the judge that sentenced Martha Stewart had the ability to resentence her. According to an article published by the Los Angeles Times called “Stewart Wins Shot at Lesser Sentence, a ruling about sentencing was made within the court that allows the presiding judge the ability to resentence a defendant should they see fit, and if the case fell into an allotted time period. This would most likely pertain to Martha’s second half of her sentencing, the five-month period where she is serving home confinement, allowed only 48 hours a week to leave her premises and work for her company.
• http://proquest.umi.com/pqdweb?did=809617361&Fmt=3&clientId=9874&RQT=309&VName=PQD


In an article published by USA Today in July of 2004, reporter Olivia Barker proclaimed that Stewart needed to show some humility. Blamed for pearls and a Birkin handbag, Stewart humbled her appearance to a black pantsuit and plain tote to her court hearings. The article went on to praise her for her appropriateness but then said she needed to stay away from high-end affairs. "Martha has not set a foot wrong during this whole debacle," says Simon Doonan, creative director of Barneys New York, who counts himself a "huge fan" of Stewart. "She has dressed appropriately, comported herself appropriately and, most importantly, she has been living her life."
• http://proquest.umi.com/pqdweb?did=665939231&Fmt=3&clientId=9874&RQT=309&VName=PQD

The New York Times recently published "The Return of Martha Stewart, the Civil Case “ by Landon Thomas Jr. in May of 2006. In this article Thomas discusses how since Stewart returned from jail, she’s been, of course, in the media’s eye but in a glamorous way. However, her partner-in-crime Mr. Peter E. Bacanovic, Stewart’s personal investment advisor and stockbroker has been unemployed and penniless for the past four years. His fines could reach a maximum of $200,000, which is about three times the amount Stewart “saved” upon selling her shares.
• http://proquest.umi.com/pqdweb?did=1041754851&Fmt=3&clientId=9874&RQT=309&VName=PQD

Media Coverage vs. MSLO Statements:

The media coverage concerning the Martha Stewart inside trading allegations was for the most part very much unbiased. Most stories released covering the issues surrounding Stewart merely stated the facts of the case as they were happening chronicling, the original accusations, the trial, the sentence, the release from prison and, Stewart’s eventual reemergence into mainstream culture. However, there were articles released that portrayed Stewart in a more negative light, featuring individuals who claimed the CEO, “got what she deserved.” In an article released by the San Francisco Chronicle in March of 2004 entitled, "Fans react to verdicts with outrage and delight / Many figured Stewart's celebrity status would get her off the hook,” a patron of Stewart, Donna Bandelloni, an investment adviser from San Rafael, is quoted as saying, “You don't get special treatment because you're famous. It's a message to people of wealth and power that they'll be held accountable."
Although, many in the nation did hold negative sentiments towards Stewart for her actions there were also articles released that portrayed Stewart as a victim claiming, that she was merely targeted because of her status as a female figurehead in American business. In an article released by the New York Times, in September of 2002, entitled,” Why the Rush to Find Fault in Women? ," Vicky Lovell, a study director for the Institute for Women's Policy Research in Washington, is quoted as saying, “There still is a lot of old-fashioned, antiwoman sentiment that causes people to interpret women's behavior differently than they would interpret the same behavior from a man. So a man selling his stock might be a good forecaster of the stock market. A woman selling her stock is unscrupulously taking advantage of insider information.''
These messages released by the media are the messages that mirrored those of Stewart’s company, MSLO. Statements released by the company immediately conveyed to the public that Stewart’s personal legal matters in no way were meant to compromise MSLO business objectives or harm any of her employees or consumers. Although Stewarts legal troubles did put her in jail for five months, on house arrest for another five, resulted in her losing her title as CEO of MSLO, caused an initial plummeting of MSLO stock prices, and the loss of jobs for over 200 MSLO employees the company, continued to support their leader. Many of the statements and news releases between 2004 and 2005, the height of Stewart’s legal troubles, reflected her company’s continued support for and belief in their leader.
In a statement released on September 15, 2004 the company said, “The Board of Directors, management and employees of Martha Stewart Living Omnimedia, Inc. are fully behind Martha and her courageous decision. We look forward to the time when she will be back, using her special gifts to help us make homes more beautiful, more comfortable and more joyful for homemakers and families everywhere. Until then, Martha knows she can count on all of us to continue to do what she has taught us so to do so well: inspire, teach and bring quality products to the millions of readers and customers who look to us every day for hot-to ideas and merchandise they can use in their own lives. Her standards for excellence will continue to guide everything we do.”
Stewart’s personal remorse was also many times reflected in MSLO news releases in an effort geared toward humanizing Stewart and reminding the public that she was still the same kind-hearted Martha Stewart that they were all familiar with. In a statement released on May 18, 2004 in regards to her show Martha Stewart Living being put on hiatus, while Stewart served her five-month prison sentence, Stewart is quoted as saying, “I am deeply sorry that is has become necessary for the show to go on hiatus until my personal legal situation is resolved. Words cannot convey my appreciation and admiration for the skills and dedication of our talented television employees…I also want to express my gratitude for the continuing support of our millions of dedicated viewers all of the country, and look forward to rewarding their patience and loyalty in the future.”
The forward looking mindset, continued support of MSLO for Stewart and, Stewart’s own humility concerning her legal matters has allowed the company to rebound from its original shortcomings. Allowing Stewart to outwardly apologize kept her humanized and reinforced MSLO strategy of keeping Stewart in the limelight. Never letting Stewarts image of the proper housewife and entertainer die, through constant promotions including, a new talk show, magazine, radio show and, partnerships among other things has kept Martha Stewart as a prominent figurehead in American business as well as in American homes. Keeping Stewart in the public eye is and was a necessary in order to show her perhaps skeptical audience that she still is the kind-hearted Martha Stewart that everyone knows and loves.

Lessons:
The Rise Again: Stewart Shows Viewers She is Moving On

Upon evaluating this case study, we found multiple lessons to be learned. This case is a clear example of a wrongdoing, a falter and a recovery. What we can specifically learn, as young PR professionals is the process of this recovery. When dealing with a high profile, such as Martha Stewart and her empire of wealth, it is clear that certain strategic steps become necessary in restoring an image. Though this is an obvious example of a high-end entertainment figure, these same crisis-control practices can be manipulated for a small firm or non-profit organization as well.

For example, Martha Stewart’s team used tactics such as her books as a way of restoring multiple levels of her fame. One way to adhere to the public is through an appearance of humanity and wholesomeness. What better way to get back to a good, nurturing manner than to put out a fresh cookbook? By returning to her roots of publications, Stewart was able to show the public that she was starting anew by incorporating exactly what made her famous in the first place, her talent for homemaking.

A second tactic employed was returning to her show and publication. By resuming her role as a television personality, Stewart showed her dedication to getting her life back on track. At this point she had admitted her defeat and moved on with her life. Stewart also expanded her line of home furnishings to other major companies besides K-Mart. This wider range of product placement was key because it expanded her buying audience. At this point, Stewart could literally not afford to only have one store carrying her name.

Stewart made many public appearances after serving her time in jail. For instance, she appeared on NBC’s The Today Show for homemaking contributions. This was a major tactic as well because she, once again, was right back in the public’s eye.

Stewart simply was not afraid to get back to work. She didn’t shy away from the public after her sentence but more embraced the possibilities of starting anew.

How does this compare?

When looking at other companies that have fallen into investment scandals, it’s clear that not all of them come out on top.

Who: Strong Opportunity Fund and Strong Capital Management company founder Dick Strong
What: Market Timing Scandal- jumping in and out of mutual finds to make fast money
Profit from the scandal: $600,000 over several years.
Result: Dick Strong resigns, lifetime ban from securities industry and paying 60 million in
penalties
Now: longtime manager of Strong Opportunity Fund, Dick Weiss took over the company and
attempted to boost morale and business, later sold to Wells Fargo.
(CNNMoney.com)


Basically, by observing this defeat for Strong Capital Management, we can see that by simply taking the person out of the picture (i.e. Resignation) it is clear that certain aspects are unrecoverable. Although the business is on the rise once again, it’s carrying the name of the downfall.

PR professional Interview:

For out outside approach we interviewed Financial Journalist Jeff Benjamin, senior editor of investment news for Crane. We determined that he would be a key person to speak to since he is involved in communications as well as investment.

Question: What are your thoughts and opinions on how the Martha PR people handled the case?

Answer: Personally, I did not know Martha’s case was still under appeal when she started her jail sentence. I’m not a lawyer, but that doesn’t even make sense to me. Why start a jail sentence if you believe there’s a chance the ruling could be overturned on appeal. I did not follow the trial closely, but was familiar with the circumstances leading up to the trial and I think Martha completely botched her initial public defense by suggesting she had not participated in any insider trading activity. Her initial public defense that she had a stop-loss order in place looked like a bad lie. I think her initial reaction to the charges hurt her public image badly.

*Explanation: STOP-LOSS ORDER:
Martha Stewart knows nothing if not etiquette, so when it came out that she had sold her nearly 4,000 shares of ImClone on Dec. 27, the day before the company announced the FDA would deny approval to its cancer drug, Stewart had a ready explanation: She claimed that she had arranged with her broker in November to sell the stock if it dipped below $60. (Vinzant)

Vinzant Carol. Does Martha Stewart’s Story Make Sense? MONEYBOX: COMMENTARY ABOUT BUSINESS AND FINANCE. HTTP://WWW.SLATE.COM/ID/2067318/


Question: What was her BEST comeback tactic? We've examined such tactics as her releasing a cookbook within months of her release from jail and returning to television with her new show that is more focused on interacting with audience members. The new show is called simply "Martha" while the previous was "Martha Stewart Living."

Answer: As comebacks go, you would have to say someone being paroled from jail has her work cut out for her. But this is Martha Stewart we’re talking about so I don’t think most people expected her to retire to her Connecticut horse farm. Hitting the decks running was key. It showed her fans and her company’s shareholders that life goes on and the empire is still solid, if not stronger, perhaps even sporting a few jailhouse tattoos.


Questions: Do you feel it was a good move for her PR team to keep her as such a central image and predominant part of her company while she was receiving negative press and feedback from viewers and her fans? For instance, was it good that she was kept as a figurehead for her company though she was being portrayed negatively throughout newspapers and on television?

Answer: I’m not sure there was any option beyond keeping Martha as the center of the business, even if figuratively. She is the company. It would be similar to Oprah going to jail. Either she remains the symbol of the company or the company fades away. We saw some of that in the mutual fund industry during the insider-trading and market-timing scandals of a few years ago. Strong Funds in Milwaukee was caught up in the mix when founder Dick Strong was found guilty. He didn’t go to jail, but immediately resigned. Within a year the company was sold to Wells Fargo. The scrutiny on corporate executives these days is such that they need to be squeaky-clean all the time. And when the company executive shares his or her name with the company, that rule is doubly important. With that in mind, it makes you wonder what the hell Martha was thinking when she started trying to lie her way out of trouble.

Works Cited:
Berenson Alex. "There's a Reason Your Mother Told You Not to Lie. " New York Times [New York, N.Y.] 7 Mar. 2004, Late Edition (East Coast): 4.14. National Newspapers (27). ProQuest. 18 Feb. 2007 http://www.proquest.com/

Cnnmoney.com
http://money.cnn.com/magazines/fortune/fortune_archive/2004/09/20/381166/index.htm
http://money.cnn.com/magazines/fortune/fortune_archive/2003/11/24/353793/index.htm

Hamilton Walter. "Stewart Wins Shot at Lesser Sentence :[HOME EDITION]. " Los Angeles Times [Los Angeles, Calif.] 19 Mar. 2005, C.1. Los Angeles Times. ProQuest. 18 Feb. 2007 http://www.proquest.com/

Hays Constance L.. "Stewart Loses in Attempt to Affect Sentencing. " New York Times [New York, N.Y.] 16 Jul 2004, Late Edition (East Coast): C.4. National Newspapers (27). ProQuest. 18 Feb. 2007 http://www.proquest.com/

Judge Allows Martha Stewart To Begin Serving Prison Term. New York Times [New York, N.Y.] 22 Sep. 2004, Late Edition (East Coast): C.4. National Newspapers (27). ProQuest. 18 Feb. 2007 http://www.proquest.com/

Martha Stewart. Wikipedia.com. http://www.en.wikipedia.org/wiki/Martha_Stewart.

Thomas Jr. Landon. "Stewart Deal Resolves Stock Case. " New York Times [New York, N.Y.] 8 Aug. 2006, Late Edition (East Coast): C.1. National Newspapers (27). ProQuest. 18 Feb. 2007 http://www.proquest.com/

Thomas Jr. Landon. "The Return of Martha Stewart, the Civil Case. " New York Times [New York, N.Y.] 25 May 2006, Late Edition (East Coast): C.1. National Newspapers (27). ProQuest. 18 Feb. 2007 http://www.proquest.com/